China and Russia impose export restrictions on fuel

China and Russia have introduced export restrictions on petrol as local prices surge and consumers protest, a sign that emerging countries are spreading the use of beggar-thy-neighbour policies from food commodities to energy.

The measures, announced over the past few days, come as inflation becomes a problem in emerging countries, forcing central banks to tighten monetary policy to cool their economies.

The move comes as oil prices on Tuesday recovered from a sell-off last week. ICE June Brent rose $1.25 to $117.15 a barrel.

Wholesale gasoline and diesel prices in New York also recovered sharply.

Moscow has raised a gasoline export duty by a hefty 44 per cent this month, in what amounts to the imposition of a prohibitive tax on overseas sales.

At the same time, Beijing has put strong pressure on its state-owned companies to halt overseas sales of gasoline.

Sinopec, Asiaâ€™s largest refiner by capacity, has announced that it will not export more than small amounts in May to Hong Kong and Macao.

â€œThough exporting oil products makes good profits, we have suspended exports,â€ the company said.

China and Russia have used export restrictions in the past as an anti-inflation tool in the agricultural sector.

Moscow restricted grain sales in 2008 during the global food crisis through the use of export duties and quotas and imposed a total export ban in August 2010 after a drought destroyed its crop.

The export ban remains in place.

Beijing imposed an export ban on rice in 2008 after the cost of it surged to an all-time high on the international market.

Commodity analysts and traders blame the export restrictions for exacerbating the 2007-08 food crisis that triggered panic buying among importers.

Moreover, analysts and traders said that the export restrictions in China and Russia would depress local fuel prices, stopping price signals from helping to slow demand growth and deterring refiners from investing in new capacity.